Kenya Power offices on Aga Khan Walk in Nairobi.
Auditor General Nancy Gathungu has flagged Sh14.4 billion diesel supply tender by Kenya Power that was questionably awarded to the highest bidder, and way above estimated budget allocation for the supplies.
A report for the financial year ended June 30, 2024, shows that KPLC was in the market seeking low-sulphur diesel for its off-grid stations.
The approved tender estimated that the quantity required for the stations to be 31,020,000 litres every year, totalling 62,040,000 litres for two years, with a total cost of about Sh3.8 billion and Sh7.6 billion annually and for the two years, respectively. However, bidders quoted prices, which were higher than the budget estimates, with the most responsive bidder submitting Sh14,379,262,976, which was 205 per cent above the budget estimate.
“Despite the tenderers quoting prices above the budget, the evaluation committee in a report dated November 22, 2023, recommended awarding the most responsive bidder who had quoted a price of Sh14,379,262,976, subject to the estimated annual budget of Sh3,868,66,072,” Gathungu said.
Auditor-General Nancy Gathungu.
“This was contrary to Section 53(8) of the Public Procurement and Asset Disposal Act,2015, which provides that the accounting officer shall not commence any procurement proceeding until satisfied that sufficient funds to meet the obligations of the resulting contract are reflected in its approved budget estimates. In the circumstances, management was in breach of the law,” the Auditor-General added.
Kenya Power runs dozens of off-grid power stations, which are a critical cog in Kenya’s plan to attain universal electricity access. Some of the off-grid power stations were initially developed as thermal plants serving areas located far from the national power grid. A recent disclosure by the KPLC revealed that it requires an estimated 2.22 million litres of diesel to run its 30 off-grid power stations a month, or 26.64 million litres a year.
Customers pay for this diesel through the fuel cost charge, which is the second costliest component of power bills.
Kenya Power last year revealed that it will spend Sh4.31 billion to retrofit 18 of its diesel-powered off-grid stations with solar to lower costs. The hybrid systems enable the displacement of expensive thermal generation with cheaper and cleaner renewable energy.
The retrofit targeted to install 98 mini-grids and 473 stand-alone systems to boost power access in 14 counties with low grid penetration. The counties to be covered by the project are Garissa, Isiolo, Kilifi, Kwale, Lamu, Mandera, Marsabit, Narok, Samburu, Taita Taveta, Tana River, Turkana, Wajir, and West Pokot.
